10th anniversary post: Is a baseball complex a (merit) good?

 

Source: Google Maps

In the summer of 2014, I wrote a reaction to news of state and local government contributions to a new baseball complex outside of Marion. At the time, the state had provided a $1.266 million grant, the City of Marion $750,000, and Linn County had donated the land. Ultimately, according to the operation's webpage, Prospect Meadows secured $5.5 million in public funding, about half the startup cost of the project ("Our Story" n.d.).

At the time I was less impressed by the audacious scope of the project than by the very ordinariness of the public-private transaction. There hadn't seemed to be a lot of controversy or even discussion about the governments donating to the creation of a private business. Yet, in a world (Earth) where government budgets at all levels are stressed, and in which market efficiency is praised as an alternative to governmental inefficiency, this was a lot of money to spend without examining the very basis of the expenditure. I quoted Adam Smith on public works, which are necessary but properly...

can be made only where that commerce requires them, and consequently where it is proper to make them (Wealth of Nations, V.i.iii, Art.1)

and Strong Towns on providing existing businesses with technical assistance rather than handouts to selected ventures, which would include baseball complexes and our current obsession, data centers:

[B]y the way, we'll still be bringing jobs and new businesses in from outside the community. The only difference will be that we won't be paying them to come--they will want to be here. If we are successful--and we will be--they will be paying us to come here. (Marohn 2012: pt.2)

Prospect Meadows began operation in 2019, right before the onset of the coronavirus pandemic--certainly not the most auspicious year for any business, though it did receive over $2.6 million in American Rescue Plan Act money (King 2024: 7A).

Now comes word that the firm is asking governments for additional money to pay off debts. Projections of future revenue remain optimistic, but they have not been hitting their targets, and the well-connected, well-funded management of Prospect Meadows have reached out again. In September, the Linn County Board of Supervisors approved a $250,000 grant contingent on additional funding being raised by the firm. The City of Cedar Rapids, whose city limits are about 10 miles from this complex on the other side of the City of Marion, will consider advancing $300,000 that would eventually go to Prospect Meadows from the city's hotel-motel tax fund (King 2024: 1A). 

Local governments are stuck in an unenviable position, because the risk in this venture has already been socialized. As Linn County Supervisor Louis Zumbach points out, "If it isn't a ball field, what does it become? Any other use is going to cost more money" (King 2024: 7A).

The Lingering Question: Is Government Support for Prospect Meadows Responding to a Market Failure?

In a mostly-market system such as America's, government's role is to act when the private market is not meeting some need. This contingency is known as market failure, which admittedly [a] has a certain pejorative sound to it, unintended, but there it is; and [b] is a vague and plastic concept. You will see market failure where I don't, and vice versa. Not wrong, just different. 

Market failures come in a variety of forms but fall into two broad types. Sometimes the conditions for a market don't exist for a good, like clean air (not excludable) or food safety (buyers have insufficient information) or some monopoly (insufficient competition). Other times all of those conditions exist, but the outcomes are politically unacceptable, like recessions (very unpleasant and scary) or access to parks (everyone deserves this regardless of ability to pay). Market transactions can have externalities, effects that fall on people other than the buyer or seller; these can be negative (pollution) or positive (better educated people in your community). There's much more to this, of course, but we are busy people; if you want to know more, take a course in economics.

Prospect Meadows has been making two market failure arguments for public support. One is based on services they can provide to people who would otherwise lack those opportunities. The Kiwanis Miracle League provides baseball games, equipment and uniforms to physically or mentally disabled young people. The Optimist League of Dreams serves 2nd-5th graders whose families were displaced by the 2008 flood.

The second argument is that players and their families traveling to baseball showcases bring an infusion of money into the local economy through hotel stays and restaurant meals. This is the rationale for financial contributions to Prospect Meadows from distant Cedar Rapids. Board chair Tim Strellner claims Prospect Meadows created over $11 million in local economic impact in 2022, resulting in $1 million in tax payments to local governments (King 2024: 7A). That's out of a gross domestic product for Linn County of nearly $20 billion (FRED).

Allowing for some exaggeration, would that economic activity not have occurred but for the showcases offered by Prospect Meadows? Would the several dozen children been inactive but for the opportunities of their programming? Probably no to both questions, but that's the justification for massive government support for this venture.

Conclusions

Government support for Prospect Meadows over the last decade, and continuing into the next one, likely owes more to personal connections, and the tendency of policy makers to be impressed by big splashy plans. I wish we could be more principled: no government money unless a market failure is conclusively demonstrated. I wish the public would be more allergic to situations where profits are private but risk is socialized. 

$300,000 is admittedly a small part of the city's FY25 budget of nearly $900 million. It's only worth mentioning as one probably common case of expenditure that socializes what should be private risk. Collectively these expenditures have opportunity costs, because money spent thusly can't go to street repair or housing assistance or park equipment. None of those will gin up business for our hotels, but that shouldn't be the business of government. They would enable the daily lives of residents, and that should be the business of government.

NEW SOURCE: Grace King, "Prospect Meadows Complex Seeks Public Aid," Cedar Rapids Gazette, 18 September 2024, 1A, 7A

Adam Smith and the Road to Correctionville

US 20 in northwestern Iowa; photo by Tim Hinds, swiped from
siouxcityjournal.com

The State of Iowa passed a 10 cent increase in the motor fuel tax late in February, to 31 cents (for regular unleaded) and 29 cents (for ethanol blends) per gallon. Signed by Governor Terry E. Branstad, it went into effect Sunday, March 1, exacerbating a recent rise in local pump prices from $1.899 to $2.459 per gallon.

The measure's quick and relatively easy passage reflects widespread concern that maintenance of roads and bridges has fallen dangerously behind schedule all across the United States, including Iowa. Majorities, albeit narrow ones, of both parties in each house of the Iowa legislature supported the bill, and Republican governor Branstad clearly supported it, saying: I believe that the leadership deserves credit for working together on a bipartisan basis to pass a piece of legislation that I think will be very beneficial to meeting the needs of the counties and cities as well as the state transportation network.

The tax increase is expected to raise upwards of $200 million dollars in additional revenue. The state will allocate 47.5 percent to the state Department of Transportation, 32.5 percent to counties, and 20 percent to municipalities. The belief that street repairs are funded through the gasoline tax is a common misconception, and now it won't entirely be a misconception. In Cedar Rapids, for example, the funds will increase the streets budget by about 10 percent over what is currently provided through local property taxes. On the other hand, the measure taketh away from cities by limiting their ability to issue their own bonds for transportation money. So much for the myth of local control.

Raising gasoline taxes can correct two types of market failures:

1. As its advocates stressed in Iowa this year, gasoline tax revenues can provide a dedicated source of funding for highway maintenance, which is a "public good" because there does not appear to be incentive for private firms to provide this service. In fact, Adam Smith used public roads as the example of a public good, in The Wealth of Nations, book V.
2. Gasoline taxes can address a "negative externality" of driving cars: The market price of gasoline does not reflect effects of driving such as air pollution, resource depletion, habitat destruction and fighting wars in the Mideast. Raising the price of driving discourages people from doing it so much, which reduces the amount of those bad things listed above. Moreover, it does so more efficiently than regulation and more effectively than gas mileage standards (which reduce the cost of driving and so encourages rather than discourages it).

Adam Smith, from Wikipedia

However, Smith cautions us that, while public officials can address problems that markets ignore (or even create), political processes lack the discipline the market imposes. Iowa's politicians now have $200 million more dollars a year, and constituents that seem (to them, anyway) to expect to receive all good things for free. So there's an undeniable temptation to spend the windfall on flashy new construction projects instead of maintaining the infrastructure we're having trouble keeping up with. (Remember why we passed this thing?)

So, while IDOT's final decision is a ways away, one of the first things likely to be on the to-do list will be to widen US 20 in northwest Iowa between Correctionville and Early from two lanes to four. Governor Branstad is squarely behind this: They are working right now on a stretch of Highway20 from Moville to Correctionville, so that leaves you with a small segment of 37 miles from Early to Correctionville that needs to be completed. (The Quad City Times notes the effort to make US 20 four lanes across the state is 50 years on. So what? We're not building highways for 1965, we're making decisions for now.) Locally, the Cedar Rapids Gazette suggested the increased revenue is likely to be used to add lanes to Collins Road, Interstate 380 towards Iowa City, and the two lane section of US 30 west of town.

One might object that if we're having difficulty maintaining and repairing existing infrastructure--insert John Oliver commentary here, particularly the orgy of ribbon cutting about 10:45 in--the answer is not to add more infrastructure. One would probably not get elected dogcatcher, either. But, sheesh... average daily traffic count on US 30 immediately west of US 218 in 2013 was 6500, and by the time you get to the county line it's 4190. In Ida County, where the picture above was taken, the last survey (2011) counted less than 3000 cars on US 20 except for a brief stretch immediately by the intersection with US 59, where it reaches 3750. That's comparable to Memorial Drive SE in Cedar Rapids. WHY ARE WE SPENDING MONEY TO WIDEN LONELY HIGHWAYS?

Another, only slightly tangential point: Given that our country's transportation budgets for the last 70 years have amounted to enormous subsidies for driving, one might also argue for using some of the new revenue to improve bus systems and to invest in commuter rail. One would, in that case, certainly not be an Iowa elected official. They all want to party like it's 1949.

SOURCES

Rod Boshart, "10-Cent Gas Tax Increase Starts Sunday," Cedar Rapids Gazette, 26 February 2015, 1A, 10A

Rod Boshart, "U.S. 20 May Be Iowa Gas Tax Hike Beneficiary," Quad City Times, 25 February 2015, http://qctimes.com/news/local/government-and-politics/u-s-may-be-iowa-gas-tax-hike-beneficiary/article_adaca84a-274c-5622-a8d4-f43c279cd683.html

B.A. Morelli, "Gas Tax Paves Way for Area Projects," Cedar Rapids Gazette, 26 February 2015, 10A

Erin Murphy and Dave Dreezen, "Branstad: Fuel Tax Hike to 'Fast-Track' Highway 20 Widening," Sioux City Journal, 26 February 2015, http://siouxcityjournal.com/news/local/a1/branstad-fuel-tax-hike-to-fast-track-highway-widening/article_e7295eb7-5997-5425-aff8-baef555549ce.html

William Petroski, "Gas Tax Takes Effect Sunday," Des Moines Register, 25 February 2015, http://www.desmoinesregister.com/story/news/politics/2015/02/25/iowa-gas-tax-branstad/23990671/

NOT-TO-BE-MISSED VIDEO: "Last Week Tonight with John Oliver: Infrastructure (HBO)," https://www.youtube.com/watch?v=Wpzvaqypav8&t=88

MY EARLIER ADAM SMITH-INSPIRED POST: "Is a Baseball Complex a Public Good?," 5 August 2014, http://brucefnesmith.blogspot.com/2014/08/is-baseball-complex-public-good.html

Is a baseball complex a public good?

Baseball [picture from commons.wikimedia.com]

[ADDED 8/8/14: My Economics colleague Rick Eichhorn points out that a baseball complex cannot by definition be a public good, because it cannot be, in economist-speak, "non-rival and non-excludable." So to be precise, I am asking: Can a baseball complex provide a public good, that being economic vitality, from which all (baseball players or not) benefit, and which the market on its own cannot provide? As you will see from the following, I am dubious. Quite dubious, really.]

The Iowa Transportation Commission recently awarded a $1.266 million RISE (Revitalize Iowa's Sound Economy) grant to a baseball/softball complex planned northeast of Marion, on State Route 13 near County Home Road. The grant is in addition to a $750,000 grant from the City of Marion, and Linn County's effective donation of the (county-owned) land. The business owners hope to raise an additional $4.5 million in public funds, in all amounting to somewhat more than half the cost of the $11 million project. The rest of the funding would be raised from private sources.

PMBF president Jack Roeder, formerly general manager of the Cedar Rapids Kernels minor league baseball team, projects the 17 fields will host local leagues, travel tournaments for high school prospects, and (at the specially constructed Miracle Field) games for people with physical disabilities. They anticipate 120,000 visitors annually, half from out of the area, $25 million in direct spending, and creation of 200 full- and part-time jobs.

It is a good idea to take claims of future economic benefit with a grain or two of salt. There are unknowns beyond this:

1. Is there a shortage of baseball/softball facilities in the area? The complex would add to an existing stock of area ball parks, including Diamonds Sports Complex in Cedar Rapids, which consists of four diamonds and is also located on Route 13, about eight miles south of the proposed Prospect Meadows Ball Fields location.
2. Could the project have been done without public funds? The non-profit West Michigan Sports Commission just opened a similar, though smaller, facility in Grand Rapids, funded entirely with corporate, private and non-profit money.
3. Will the development exacerbate sprawl, which Marion has already done to a fare-thee-well? The RISE grant is for road-building, at a time when the region (just like most of the country) is having a difficult time keeping up with maintenance of existing infrastructure.
4. Is travel baseball a good idea, or does it put excessive strain on young arms as they chase the dream of professional contracts or college scholarships?

Besides not knowing the answers to any of those questions, I have to admit to rather blinkered vision. If you've spent any time on this blog you've detected a strong bias towards downtown and neighborhood development. (I like trails, too, but don't talk about them as much.) I don't spend much mental energy on either amateur baseball or on Farthest Marion. So take that into account when you read the following.

There is a role for government in economic development. But just because markets do fail from time to time doesn't mean everything we don't have is the result of a market failure. Iowa State University economist David Swenson, in a paper explaining the origins and use of tax increment financing (not yet a factor in the ball field case), lists five factors encouraging state and local governments to go beyond traditional regulation and service provision, beginning in the 1980s: (1) rural household dislocation and out-migration, (2) large losses in traditional manufacturing capacity, (3) absence of economic diversification, (4) statewide depopulation, and (5) erosion of small town commerce and social institutions (pp. 2-3). Not all of these pertain to metropolitan Cedar Rapids, of course, but enough do that we participate in the nationwide scramble for new enterprises. This scrambling is not always well-advised or fiscally efficient. Again Swenson:

[T]remendous increases in competition for capital development among the states and cities have led states and local governments to use more types and greater inducements to support growth.... It has now evolved that for any city or state to be competitive, there must be a substantial "standing offer" of incentives on the table or business will look elsewhere.... As the economic development process is informationally asymmetric, that is, the firm has all of the knowledge and the awarding governments only know what the firm tells them, one must assume that all governments, state and local, frequently make inefficient decisions regarding public subsidy of development, and that public resources are therefore not used for the best purposes (pp. 4-5).

How, then, should local governments approach economic development? Adam Smith, in his brilliant and authoritative though occasionally ponderous Wealth of Nations, published in 1776, recognized the existence of market failures. In Book V, he explains it is the duty of the sovereign to erect public works and institutions, which are unprofitable to private investors but needed by society. (For example, roads and bridges are needed to facilitate commerce, and schools are needed to promote the instruction of youth.) But even so, he is ambivalent about government activity in this area, fearing that officials will respond to political power rather than to genuine social need. Funding public works through user fees such as bridge tolls, for example, ensures bridges "can be made only where that commerce requires them, and consequently where it is proper to make them" (V.i.iii, Art. 1). The genuineness of social need is a matter of perception, of course, which gets us away from the mechanistic operations of the economic marketplace and puts us in danger of manipulation.

Smith's argument remains valid today, even as the scope of government necessarily has expanded greatly since 1776 in order to keep pace with economic and technological change. Faced with this reality, we can either deny any governmental efficacy and reject its role entirely, or tolerate its great inefficiencies and hope that occasionally the interests of the powerful will coincide with ours, or figure out some way of making government work efficiently in the general interest. That's a tall order, but here are a couple of suggestions by way of procedures that I think will improve governmental responsiveness:

1. Empower metropolitan regional governments (see Calthorpe and Fulton, ch. 4). Political arrangements should be scaled to reflect the realities of people's lives and our economies. Regional planning and revenue-sharing will reduce the ability of private interests like Physicians Clinic of Iowa to play municipalities off against each other, so that a win for Cedar Rapids (or Hiawatha) is a win for the whole region. It thus eliminates one of the main drivers of sprawl.
2. Economic gardening (see Hamilton-Pennell; Marohn, pt. 2). Rather than having other taxpayers subsidize the creation of new businesses, what can we do to enhance the success of existing businesses? By providing technical and information assistance to small businesses, Littleton, Colorado (which pioneered this approach 25 years ago) has grown its economy without special subsidies or breaks. As Chuck Marohn of Strong Towns points out, this involves an accumulation of small efforts and results, none of which is individually photogenic. But where tried it has brought results at a much lower cost than falling for the big promises of those who happen to be politically well-placed. Marohn concludes: [B]y the way, we'll still be bringing jobs and new businesses in from outside the community. The only difference will be that we won't be paying them to come -- they will want to be here. If we are successful -- and we will be -- they will be paying us to come here.

I oppose public funding for Prospect Meadows Ball Fields, for the same reason that I opposed the $10 million local governments are sinking into redoing Westdale Mall. They are substantial public investments without a public goods rationale, responding to the political influence of private power rather than to genuine social need. I'm ambivalent about the $250 million extension of Route 100, but find the public goods arguments I've heard so far to be weak.

Our common life in the next century requires a role for government, but only if it's done right. We simply must find a better way.

SOURCES

Peter Calthorpe and William Fulton, The Regional City: Planning for the End of Sprawl (Washington: Island Press, 2001).

"City of Marion Pledges Support for Prospect Meadows Ball Fields," Cedar Rapids Gazette, 22 February 2013, http://thegazette.com/2013/02/22/city-of-marion-pledges-support-for-prospect-meadows-ball-fields/

Pat Evans, "Sports Complex Forecasts $20M Economic Impact," Grand Rapids Business Journal, 1 August 2014, http://www.grbj.com/articles/80252-sports-complex-forecasts-20m-economic-impact

Christine Hamilton-Pennell, Strengthen Your Local Economy Through Economic Gardening (ICMA Press, 2010). An excerpt is here; more information on the "Growing Local Economies" website [http://growinglocaleconomies.com/economic_gardening].

Chuck Marohn, "From the Mayor's Office," Strong Towns, 22 March 2012, http://www.strongtowns.org/from-the-mayors-office-strateg/

Rick Smith, "Cedar Rapids' Prospect Meadows Project Receives $1.3 Million," Cedar Rapids Gazette, 10 June 2014, http://thegazette.com/subject/news/cedar-rapids-prospect-meadows-project-receives-13-million-20140610?utm_source=thegazette&utm_medium=web&utm_campaign=discovery

David Swenson, "Tax Increment Financing in Iowa: Background, Research and Recommendations," presentation to the House Ways and Means subcommittee, 27 February 2012, http://www.econ.iastate.edu/research/other/p14935

Is there a "natural" minimum wage?

(Adam Smith [right] and David Hume, Edinburgh, from en.wikipedia.org)

Reading Adam Smith's 1776 masterwork, The Wealth of Nations, provides an interesting perspective on contemporary debates over the minimum wage in the U.S. He covers "the wages of labour" in chapter 8 of book 1.

By this point in the book, he has already made two key points: 

1. Humans' innate self-interest lead them to pursue strategies in the economic marketplace that (in most cases) regulate the supply, demand and price of goods more quickly and effectively than an external actor (e.g. the government) can.
2. The natural price of any good is determined by the cost of the labor required to produce it, profits to reward the risk undertaken by the employer, and the "rental" cost of land and facilities. For a number of reasons, employers and renters are better positioned to command shares of the income from sales of the good, so the wage-earner gets the smallest share.

Smith argues in chapter 8, despite employers' clear advantage in contract negotiations, "there is however a certain rate below which it seems impossible to reduce, for any considerable time, the ordinary wages even of the lowest species of labour." He defines this rate as sufficient pay to maintain the worker, his wife, and a family of four children. This is based on the very 18th century assumptions that (a) the wife will not be working full-time, and (b) only 50 percent of the children will survive to adulthood. Without the ability to bring up new workers, "the race of such workmen could not last beyond the first generation." This level of wages is "evidently the lowest which is consistent with common humanity."

Who or what enforces this minimum wage level? Smith implies, without explicitly saying so, that it will be enforced by the market i.e. by the self-interest of employers. Employers can't underpay their workforce to the point of starvation, because if the supply of workers declines the price of labor will rise. But while the employers' long-term interest is clear, their short-term interest is not, and Smith is enough of a realist to know that short-term interests come first. Moreover, he was living at a time when the slave trade was legal both in the United States and Britain, allowing slaveowners--who paid their slaves nothing--to purchase more slaves when the ones they had had been worked to death.

The reference to "common humanity" additionally implies a potential role for the employers' conscience, but that would be a novel argument for Smith, who made it clear early in the book that the benevolence of others was not to be relied upon. "[M]an has almost constant occasion for the help of his brethren," he has written in chapter 2 of book 1, "and it is in vain for him to expect it from their benevolence only [italics mine]. He will be more likely to prevail if he can interest their self-love in his favour, and shew them that it is for their own advantage to do for him what he requires of them."

If the market does not enforce the minimum wage, and the employers' "common humanity" can't be counted upon to supply it, does that mean it's up to the state? Smith doesn't suggest such a thing, and given the ambivalence he expresses throughout this work to government involvement in economic matters it's doubtful that was his intention. 160+ years later, anyhow, the U.S. enacted a minimum wage of 25 cents an hour in June 1938 (applying only to workers engaged in "interstate commerce," which is all the Constitution allows the national government to regulate). This amounts to $4.08 an hour in 2012 dollars. The minimum wage hit its purchasing power peak in 1968 when it was raised to $1.60 ($10.59 in 2012 dollars). The current dollar value fell to $5.87 in 2006 before a two-stage increase was passed the following year. In 2012 4.7 percent of hourly paid workers were paid at or below the federal minimum wage of $7.25. [Data from The World Almanac and Book of Facts 2013, p. 136, and U.S. Bureau of Labor Statistics homepage] Most workers who start at or below this level, including your humble author, quickly rise above it, but a notable percentage of minimum wage workers stay around there for a long time (Carrington and Fallick; cite below). Of course, either incremental or dramatic increases to the minimum wage (both have been proposed) would push a larger percentage of wages upward, particularly if it went to $10.10.

Is the current federal minimum wage above or below the "natural" level that would exist if the federal standard were revoked? That's difficult to say, in part because low-wage workers are eligible for a broad array of government benefits that supplement their income, including health insurance, food "stamps," the Earned Income Tax Credit, and housing and child care assistance. Their children are eligible for the school lunch program. In this sense, the government has taken the onus off employers of ensuring their workers have sufficient income.

Resting assured that the economic marketplace will provide a floor to wages, and the correct one to boot, means you don't have to think about whether that floor should be $7.25 per hour (about $14,500 per year for a full-time worker), or Illinois' current $8.50 ($17,000), or something lower. But Smith's use of the phrase "common humanity" in chapter 8 points us to consciously considering how much income is actually "sufficient." Efforts to calculate sufficiency, such as the MIT Living Wage Calculator, suggest the floor of sufficiency is a lot more than $10.10 an hour. (For example, MIT calculates a "living wage" for a family with two adults and two children in Cedar Rapids to be $18.64 an hour.)

And sufficiency depends at least in part on characteristics of place: A car is necessary if work is located far from affordable housing. And sufficiency in 2014 surely requires more than was sufficient in 1776, just to keep up with what is expected of a worker or parent. Child care is necessary if we expect both parents to work. Health care is much advanced beyond 18th century standards, but costs a lot more, too. You can't wash your clothes in streams.

I pretty much agree with conservatives like Senator Marco Rubio (R-Florida), who told an interviewer in 2013: "You can't [improve working class prospects] by mandating it in the minimum wage laws. Minimum wage laws have never worked in terms of having the middle class attain more prosperity." (I don't agree with Rubio and others that an increase will necessarily lead to job losses; historical evidence and economic opinion on that are mixed at best, and there's reason to believe it would have the opposite effect.) Minimum wage laws, overtime rules, unemployment insurance benefit extensions, and food assistance are patches on an economic system that is working for fewer and fewer people. That's the real problem: economic opportunity. Solve that, and you can make the minimum wage negative for all I'll care.

In a society which afforded economic opportunity for everyone no matter where they're starting from, the minimum wage rate would be a mere temporary concern for teenagers working at their first part-time job, and an otherwise "academic" question. But we are far from being such a society. Not only is opportunity far from equal, but the future of work itself is hardly assured. A new book by the economist Thomas Piketty, Capital in the Twenty-First Century (Harvard, 2014), argues from three centuries of data from 20 now-developed countries that in free markets capital tends to increase its proportion of national revenue, leaving less and less for labor--actually what you'd expect from Smith's observations on the relative power of renters, managers and laborers. And that's counting in the labor portion the stratospheric incomes accruing to contemporary CEOs and financial wizards.

The enormous gaps in wealth and incomes that have opened up in the last 40 years are the historical rule; the spread of wealth in the mid-20th century noted by Simon Kuznets (cited below) was an exception, attributable to an unusual mix of factors including high taxes on the rich. Population growth helped create a bigger pie before, but probably won't happen in the future, at least not in the proportion of the last 300 years.

Economic opportunity will not happen on its own (nor, Piketty argues, by relying only on better education). Something needs to be done. It seems unwise to wait for "nature" to take its course. Addressing the purchasing power of the minimum wage is a tiny step in that direction, but a step nonetheless.

SOURCES AND FURTHER READING

William J. Carrington and Bruce C. Fallick, "Do Some Workers Have Minimum Wage Careers?," Monthly Labor Review, May 2001, www.bls.gov/opub/mlr/2001/05/art2full.pdf

Simon Kuznets, "Economic Growth and Income Inequality," American Economic Review 45:1 (March 1955), 1-28, http://www.aeaweb.org/aer/top20/45.1.1-28.pdf

Eduardo Porter, "A Relentless Widening Of Disparity In Wealth," New York Times, 12 March 2014, B1, B4, reviewed Piketty's book. Piketty was interviewed by Porter for the Times' Economix blog here.

Rachel Weiner, "Marco Rubio: 'I Don't Think a Minimum Wage Law Works,'" Post Politics, 13 February 2013, http://www.washingtonpost.com/blogs/post-politics/wp/2013/02/13/marco-rubio-i-dont-think-a-minimum-wage-law-works/

I've written earlier posts pertinent to this subject:
 "The Future is Exciting and Scary," June 24, 2013
 "Poverty and Economic Growth," September 27, 2013
 "The 'New Normal' Economy and Place," November 20, 2013